TransUnion's Consumer Credit Risk Index Hits Record Level

"The Credit Risk Index is a true barometer of today's economy, and the first quarter of 2009 indicates that the inherent level of credit risk within the U.S. is now 27.26 percent higher than the level reflected in TransUnion's consumer credit database at the conclusion of 1998," said Chet Wiermanski, global chief scientist at TransUnion. "Credit Risk Index data suggest that the growth in consumer credit risk has slowed during the past quarter, a positive note. However, the index remains at an all-time historical high, indicating that delinquencies and foreclosures will continue to rise in the coming months."

"It is apparent that many of the states experiencing the highest increases in credit risk are the same when looking at the Credit Risk Index statistic on both a quarterly and yearly basis," said Wiermanski. "This leads TransUnion to believe that consumers in these states will experience prolonged systemic difficulties in both in their ability to satisfactorily repay their existing credit obligations and in their ability to acquire new credit.

"While an individual credit score can be quite powerful and accurate in predicting the probability of delinquency for an individual, the average credit score for a specific geography or customer segment does not accurately portray the level of risk existing within that footprint or segment to the same degree as TransUnion's Credit Risk Index. This is because most credit scores are built on a non-linear scale, so averaging scores does not yield the correct measure of underlying probability of default. Credit Risk Index is a great instrument for gaining insight into the potential impact of external factors on the credit risk and rate of default within a given region, or for a given population segment, precisely because it accounts for the non-linearity of the underlying credit score," continued Wiermanski.

TransUnion's Credit Risk Index reflects the distribution of consumer credit risk as measured by TransUnion's TransRisk Account Management Credit Risk Model and is a key metric within TransUnion's Trend Data database. For comparison purposes, the Credit Risk Index in recent years has generally ranged between 110 and 120, experiencing a one- or two-point shift between quarters.

The source of the underlying data used for this analysis is TransUnion's Trend Data, a one-of-a-kind database consisting of 27 million anonymous consumer records randomly sampled every quarter from TransUnion's national consumer credit database. Each record contains more than 200 credit variables that illustrate consumer credit usage and performance. Since 1992, TransUnion has been aggregating this information at the county, Metropolitan Statistical Area (MSA), state and national levels. http://www.transunion.com/trenddata